With the passage of the "American Tax Relief Act", any 401(k) plan that allows for Roth contributions will now be eligible to convert existing pre-tax 401(k) balances to an after-tax Roth 401(k). Previously an employer-sponsored plan [401(a)/(k), 403(b) and governmental 457(b)] could only be converted to a Roth IRA. The Roth 401(k) conversion amount would be taxable in the year of conversion, but all gains (or growth) would be distributed completely tax-free at retirement. Is this a good option for you? A conversion has both advantages and disadvantages that should be carefully considered before you make a decision. This calculator compares two alternatives with equal out of pocket costs to estimate the change in total net-worth, at retirement, if you convert your per-tax 401(k) into an after-tax Roth 401(k).
The Retirement Advantage
47 Park Place, Suite 850
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.